Rise of the machines: Retail tech predictions for 2017

2017 looks to be the year when Artificial Intelligence and Virtual Reality will really break into the retail world, says Guy Chiswick, from Webloyalty.

The growth of online retail has brought about a revolution in the way we shop and the pace of change doesn’t seem to be abating. In particular, much has been written about the real-world potential of Artificial Intelligence (AI) and Virtual Reality (VR) and 2017 looks to be the year when they will really break into the retail world.

Analysing and predicting

Computers are more powerful than ever before and retailers now have access to reams of data, readily available thanks to the rise in e-commerce. Tools can analyse shopping data in real-time and entirely redefine how they interact with you. Advances in technology mean that systems can now not only analyse data but make predictions too, anticipating for example, which other products might be of interest. This insight will help retailers to create increasingly elaborate customer shopping experiences, tailor-made for individual consumers.

High street shops including Marks & Spencer and Dune have begun experimenting with in-store technology that tracks customers’ movements from the signals released when their smartphones are searching for Wifi networks. The theory is this will help them understand and predict the paths their customers take, enabling them to adapt the in-store layout accordingly to maximise the time spent in-store. This is further proof that on-and-offline channels shouldn’t be seen in isolation: retailers can use technology to enhance the bricks and mortar experience.

Analysing customer data can be taken a stage further with AI and companies like Sentient are helping make this a reality. It’s created the world’s largest and most powerful distributed AI platform, which can understand retailers’ entire collections and know which products are truly similar to the one the shopper is looking at in the moment. Instead of using crude definitions such as colour or brand, it can present intelligent and personal shopper recommendations based on visual and data dimensions, increasing the likelihood of securing a sale. It’s something we’ve been seeing already at shoe retailer Skechers.com. Using Sentient Aware’s AI-powered engine, now when shoppers click on a Sketchers product they like, the rest of the catalogue is analysed in real time with granular detail to identify and serve up an amplified personalisation. As a result, subjective labelling is eradicated and subtleties, once missed, are honed using a more engaging platform.

While this offers huge potential to monitor and adapt to the customer’s real-time behaviour and personalise the experience, this does raise questions around privacy and ethics. For retailers, having a microscopic view of their customers’ activity is gold dust. But customers are understandably wary of feeling ‘spied on’, so the right balance needs to be struck between a genuinely enhanced experience, and intrusion.

Chatbots – the virtual customer service assistant

2016 witnessed many retailers experimenting with their own virtual chatbots and in total, 34,000 different bots have emerged. Chatbots, powered by a combination of machine learning, natural language processing, and live operators, can provide customer service, sales support and make suggestions for what to buy at a much greater level of detail than ever before.

From a retail point of view, the financial implication is huge – not only will the buyer get what they want and the seller make the sale, but it will also involve the minimum of effort from the retailer. Customers will have their questions answered without a single human being involved in the process. But how many people are using them? Retailers are making big investments in the technology but it must be recognised that it’s not quite there yet. So far only one chatbot has passed the Turing test – which evaluates a machine’s ability to match human intelligence and there’s a risk customers could get frustrated if they don’t fully understand them. Despite this, with technology constantly evolving and progress on the way, the potential benefits of chatbots outweigh the limitations.

Bringing products to life via VR

Virtual reality (VR) could also transform the way people shop. It immerses the consumer in a simulated world and requires stand-alone technologies such as headsets and a controller. In our recent Digital Innovations Retail Report we honoured retailers who are experimenting with VR technology to bring shopping experiences to life.

IKEA is trialling a virtual reality kitchen solution via gaming platform Steam that requires a HTC Vive headset to explore the kitchen. The company believes virtual reality will become an increasing part of retail and is keen to eventually develop an opportunity for customers to try out new kitchens before they buy. The current trial allows the user to change the colour of kitchen cabinets, walk around the area, and even shrink themselves down to the size of a child to assess safety implications. IKEA hopes that users will interact with the kitchen and submit ideas and improvements to the company thereby using it also as a customer engagement tool.

2017 looks set to be the year where AI and VR at lasts break through into the mainstream. No longer the stuff of science fiction, they have the potential to transform retailers beyond recognition.